Toyota, Mazda Offer Upbeat Outlooks as Thai Market Turns Corner

BANGKOK – Toyota and Mazda update their first-half results and look ahead to the second half of 2017, and for the first time in the last three to four years there is a tinge of optimism in the air.

With the market gaining 11% in the first half to a little over 400,000 sales, Toyota now has revised its full-year projection, calling for an 8% jump to 830,000 vehicles industrywide.

Mazda is following suit, with a new forecast just shy of Toyota’s at 820,000 units. Both automakers previously predicted sales would top out at 800,000 vehicles.

Toyota, however, has undershot the market this year, with its sales up just 3%, a performance recently appointed Toyota Motor Thailand President Michinobu Sugata, attributes to a raft of new product from other brands hitting the showroom floor.

“The other contenders launched new models, so we are a little bit lower than the market,” he notes.

With a reliance on cars and pickups, Toyota is behind the curve of changing market demand, which is shifting toward CUVs and niche models. The automaker now is promising to catch up quickly with a planned product onslaught expected to begin soon.

That will lift Toyota volume by about 8%, Sugata reckons, matching the industry pace the automaker is forecasting.

“The outlook has become more favorable, including sustained GDP growth,” he says of the industry overall. “The market is strengthening, and I hope (it) can reach back to 900,000 (units).”

Sugata doesn’t see Thailand’s first-time-buyer incentive scheme as having had much effect in propping up sales medium-term. “Normally these people hold a car for six to eight years,” he says, meaning if they purchase a car today, they won’t be returning to the market anytime soon.

Thailand will continue to be a key to industry growth in the region, the Toyota executive says.

“Thailand and Vietnam [are] recovering well (and) will help drive the ASEAN rebound,” he says. “We (expect) good sales in Indonesia, the Philippines, Vietnam…(and) growth in the six (main) ASEAN countries.”

While the Thai government continues to make a push for turning the country’s automotive base into an electric-vehicle production hub, Toyota instead is arguing the case for hybrids, which it believes better fit the market. It currently has only one hybrid on sale here, the Camry, but it has hinted at a potential investment of 20 billion baht ($598 million) to build a range of hybrid vehicles locally.

“We are discussing (the plan) with the BOI (Board of Investment), but there is nothing concrete at the moment,” Sugata says, adding a clearer picture should emerge by year’s end. “(If we) sell hybrids and learn the market more…we can learn more about EVs.”

Exports, strategically important to Toyota here, have been hammered, falling nearly 20% so far this year, but a rebound is foreseen. The full-year target is 291,000 units, which would lessen the decline from year-ago to about 10%.

“During the first half we saw a dramatic drop, so we can’t see a full recovery by the end of the year,” Sugata says. “(But) for the second half of the year we will see growth in the Middle East and more purchase orders (there, as well as gaining) new markets like South Africa.”

Mazda, meanwhile, is on a sales roll. It’s already emerged from niche status to hold the No.3 spot in the car sector in Thailand while significantly increasing its margins by shifting to the premium end of the market. At the same time, it’s drifted away from its core BT-50 pickup, which has seen its market share slide amid an overall decline for the segment.

Mazda Thailand President Chanchai Trakarnudomsuk appears confident economic conditions are right for a return to growth for the industry, and notes the auto sector has made efforts to lure more buyers to showrooms.

“It is easier to own a vehicle, thanks to low down payments and interest rates, as well as free insurance and maintenance,” he says. “Customers have more choices, and the competition in the market is extreme. The market has been highly active since the end of last year, and we can see a trend of gradual growth.”

Mazda’s volume has been boosted by the introduction of four refreshed models this year and will get another shot in the arm from two additional new models to debut in the second half of the year. It also is on a mission to upgrade its dealerships – 149 will undergo the process this year, and is adding 20 new sales points this year.

Mazda projects its sales at 51,000 units for all of 2017, up 1,000 from a previous forecast, which would represent a gain of more than 20% from 2016.